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Philstockworld Merry May Trade Review – Part 3

What a month May was!  

So far, in the first two weeks (through the 9th), we had 94 Trade Ideas for our Members and all but 11 (88%) were winners (see Part 1 and Part 2).  Of course we use hedges, where we purposely bet the opposite direction in order to protect ourselves so it's not possible to be 100% and even 88% is strange – usually we're aiming for around 66%.  

The trick isn't to be right ALL the time, but to control your losses so they don't counteract the gains.  Usually, we go for trades that have a good chance of paying 200% or more within 18 months so we EXPECT to make 10% a month or more.  When those work, we get huge wins – if we then keep our losses to 20% (of our allocation) or less – the statistics take care of themselves as +20%, -20%, +60%, -20%, 0% on 5 trades (for example) gives you 5 allocations that made an average of 8%.

When one of those allocations goes up 100%, you don't even need to get half of them right to have a winner – but ONLY if you control your losses AND maintain consistent allocations.  That's what we practice in our Long-Term Potfolios – PORTION CONTROL!  

By scaling into positions (something else we practice with our Members in our Long-Term Portfolios), even if we lose 100% of our initial position – it's generally only about 20% of an allocation.  Since we can't lose more than 20% of an allocation and we usually try to make 200% or more on the cash we lay out for our long-term trades (which nets 40% or more for a winning allocation) – again, math does its work over time.

That being said, let's have a look at how week 3 went in May:

May 12: Just Another Manic Monday

While investors may not have learned anything from the last crash, the Banksters have learned that you can manipulate just a few key,


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The Buy List – 20 Great Trade Ideas for the Rest of 2014 (Members Only)

INDU WEEKLYWhat a rally!  

While stocks certainly aren't "cheap" by any measure, we've been able to identify 20 that are still good values.  We've been compiling this list and going over trade ideas for playing them in our Tuesday Webinars since May 13th and, of course, we've been posting them in our Live Member Chat rooms, so this is just a review to consolidate our trade ideas.  

We cashed in our Long-Term Portfolio last week at what we thought was a top but so far – so wrong on that call!  Since it's up 19% in just 6 months, we're not going to cry about missing the last 400-point move on the Dow (2.5%) – we'll just have to look ahead to deploying our cash again, following the same strategy that was so successful in the first half of the year, which was, essetially, our "7 Steps to Consistently Making 20-40% Annual Returns" system:

As we did in building our Long-Term Portfolio, we're not going to rush in and buy everything.  We will do exactly what we did in January where, following our Fall Buy List, we simply added stocks from our list whenever they became cheap.  While our Members are able to pick up our trade ideas as they are released, we don't always add them to our virtual portfolios right away.  As with the first half's Long-Term Portfolio, we will track every entry and exit in both our Live Weekly Webcasts, as well as in our Live Member Chat Room and alerts will be sent to our subscribers (you can join here, Basic and Premium Members get full access).  

Our picks were originally grouped by industry sectors but, for reference purposes, I'm going to list them alphabetically below – these are the original trade ideas (the Webinar dates where we discussed our picks are next to the symbol), most are still playable but some have already taken off :

ABX (5/28) we featured in our June 3rd post - obviously one I like.  If you don't want to buy the stock for $15.90 (and we NEVER pay retail at PSW!), then you can sell the 2016 $15 puts for $2.05,
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PSW Trade Review Part 2 – Thank You Sir, MAY I Have Another!

May got off to a fantastic start

In our first week alone (see Part 1) we had 47 trade ideas between our morning posts and our Live Member Chat room and, already, 42 of them (89%) are winners.  Keep in mind the main purpose of these trade reviews is to look at the LOSERS and see if perhaps we have a better entry opportunity than we had before.  

We missed on SDS (ultra-short S&P) but that was a hedge and we are still using it into June. We missed on PNRA and that's just a better opportunity to get in.   We missed on TWTR and we already doubled down on that one and already cashed out with a profit in our Long-Term Portfolio (see our other review), not because we don't still like it but because we went to cash on our Long-Term Porfolio, since it was up 19% in 6 months and we decided to sit out the summer correction in CASH!!! 

We don't know if our timing is perfect getting back to cash but even if we finish the whole year with the $98,430 gain we have now (out of $500,000) in the Long-Term Porfolio – we've certainly done our job.  Can we do better?  Of course we can – that's why we do these reviews – to see what's going right and what's going wrong so we can make adjustments along the way.

If CASH!!! turns out to be a mistake, then we can re-deploy it – that's not complicated, is it?  I know that, as a trader, you feel like you are SUPPOSED to trade – especially those of us who are retired and, if we're not trading – we get kind of bored.  

Well, we had 11 new trade ideas this Wednesday and Thursday alone (summarized in Friday's post) AFTER we went to cash – so it's not like we died, we just took adavantage of a positive turn in our portfolio to realize our virtual profits.  After all, they aren't really profits until you take them off the table!   Good poker players learn that the hard way…


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Cashing out our Long-Term Portfolio – 29 Trades in 6 Months – Up 19%

On The Risks of Not Taking RisksAnd then there were 2.  

Just two positions remain in our Long-Term Portfolio now, short puts we sold against HOV an EGLE that are "losers," so far.  Of our other 29 virtual trades, which we finished closing today, only 3 have a loss, which gives us an 83% winning percentage – which is pretty much in-line with our usual performance for PSW Members (see our Trade Reviews).  

If you want a quick summary of my reasoning for getting back to cash – it's the same one I had back in March, when we cashed out our Income Portfolio.  I was interviewed on TV at the time, where I made my case for caution.  Since then, the S&P is up from 1,890 to 1,920 and that rubber band is simply stretched too tightly for our liking now – so we cash out our more aggressive portfolio too.  

Without further ado, here's our trade history in the Long-Term Portfolio, which died a sudden death on May 28th and 29th (there were a lot of positions to close) of 2014, at the age of just 6 months:

AAPL was our Stock of the Year pick, so that was a no-brainer and we were willing to allocate a much larger than usual block to it.  ABX is one that can still work (and we will certainly be going back to this portfolio – in addition to our new Buy List, as we seek to redeploy our cash in the 2nd half of 2014) as are BTU, CLF and EBAY.  EGLE is still open and the price is now correct, which is one of the reasons we ended up with more profit than we thought.  

GLL taught us not to play GLL, the bid/ask spreads were ridiculous.  HOV is our other still-open position, IRBT is new but we shut it down anyway (still playable) and LGF, LULU and RIG are still playable as new positions.  We didn't shut everything down because we don't like them – we just wanted to be in cash through June 10th and, if the market is


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PSW Trade Review – Thank You Sir, MAY I Have Another! – Part 1

SPY 5 MINUTE1,900 on the S&P, 16,600 on the Dow! 

The month isn't quite over yet but we're up about 3% for the year now although, as Dave Fry points out, on record low volumes – which makes the whole thing sort of suspect.  

 
It seems contrived but those that can engineer a new record SPY close were able to get the job done Friday.

To some extent, we've sat out this "rally" as we moved to mostly cash last time the S&P tested 1,900 and we're certainly not true believers just yet.  Nonetheless, our virtual portfolios are well outperforming the market despite having very little of our cash committed.  Our $500,000 Long-Term Portfolio is up a whopping 12.5% for the year ($62,500) with $499,650 of cash remaining, while even the more bearish $100,000 Short-Term Portfolio is up 0.7% ($700) with $83,840 left to deploy.  

INDU WEEKLYThat's because we're teaching our Members this year "Don't Gamble With Your Investments - BE THE HOUSE – Not the Gambler" this year.  Our key strategy where use options to sell risk to others, which gives us an excellent probability of making good money in up, down or sideways markets.  Clearly, we've had a little of all of that this year!  

We have the modest goal of making 20% a year, which keeps us on track to turn $250,000 into $5,000,000 in 15 years - allowing us to retire in style. 

We have also been constructing a new Buy List (part 1 and part 2, so far) for our Members, our 20 favorite post-earnings bargains.  Those are our "official" trades but, at Philstockworld – we're all about teaching our Members HOW to trade – using the principle of "Give a man a fish and you feed him for a day but teach a man to fish – and you feed him for a lifetime."  Not only does it benefit our students but many of our students become masters themselves and enrich our trading community over time.  


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May Portfolio Reviews – Members Only

$25,000 Portfolio Review ($25KP):  

Not much to report here, GMCR burned us but now we can turn that into a nice winner if it comes back down.  Since we made $5 on the short puts, our break-even is $14.50 and we're almost there already.  USO not going to well but not worth adjusting either.  I'd like to roll up to the $39 puts, now $1.99 for .50 or less if oil goes higher (now $102.45).  NFLX we just added today. 

Butterfly Catching Portfolio:  

I cannot stress enough how great this portfolio is for the conservative investor.  We're using just 1/6 of our buying power and generating 20% profits on the whole portfolio.  That means that 1/6th that's working is up 120% so far!  You never want to go more than 50% invested – just in case one of your positions blows out and you have to adjust but we have plenty of room to add more – when we identify another stock with options that are priced more volatile than we expect the stock to be.  It's a rough criteria but we seem to find them often enough.  The low VIX makes it rough at the moment.  Still, up 5% since last month – not too shabby!  

  • BTU – That one has been a wild ride and we'll need to roll the May $16 caller ($3.15) to the Sept $17 calls ($2.70) for net .45.  We're getting more confident in the long story here, so we'll spend $450 to move up $1,000 in strike on our 10 contracts.  Don't forget, these trades don't terminate in 2016 – we'll simply roll our long positions out to 2017 or 2018 when the time is right and keep on rolling the short positions - RAWHIDE!  
  • CZR – This one is like a little cash machine.  Looks like we're on the nose this month and that means we're profiting almost all of the $3,200 worth of puts and calls that we sold on 3/31 (45 days) against our $6,600 long position, so that's 48%


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PSW February Trade Review – Part II

We got off to a hell of a start

Part one of our trade review was a very busy week where we went bottom-fishing with 46 trade ideas (mostly bullish) in just one week and only 7 of them were misses for a very nice 84% success rate to start off the month.  

Of course bullish trade ideas are like shooting fish in a barrel when the market goes up and up like this – the smart part is that we had 46 of them and that we went heavily bullish in the last week of January, right when we were bottoming – giving us the best possible prices.  

RUT WEEKLYThat's why these channels are so important to watch, we trade inside of them, playing the odds that the tops and bottoms will hold and we try to catch the turns.  That's why, at the moment, we are BEARISH – until and unless we break over the tops of our channels – at which point we can go back to betting on new highs.  

Most of the trade ideas we review here are from inside the daily PSW Member Chat Room (and you can join here) but some are right in our morning posts, which you can have delivered to your mailbox via our Report Membership, while it's in progress, at 8:30 ALMOST every morning (some mornings I miss the mail-bot deadline).  In fact, today I'll put a couple of **'s next to trade ideas that were in the morning post – just to see how well those work out.  

Feb 3:  Meaningless Monday – Waiting on China

At the moment (7:50 am) our Futures are doing what they usually do in the morning – rising on very low volume.  We went long in Member Chat already (6:44) because you don't have to show us the same move 10 times in a row before we finally get it.  Already we picked up a nice move off the bottom with our /NKD longs up 50 points already ($250 per contract) and the Dow (/YM)


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PSW February Trade Review – Part 1

What an interesting month this has been!  

It will be even more interesting as we begin our trade reviews with the last week of the previous month and, when we left off in our January Trade Review, on the 24th, we had been shorting like crazy on the way down.  Despite the massive flip-flop in the market, we caught it pretty well and came up with 118 winning trade ideas in January against 27 misses for an 81% success rate.  

Always keep in mind that it's fairly arbitrary when we do the review vs. when we initiated the trade – especially in a market that fluctuates as wildly as this one.  As long as you follow strategy rules for stopping out, stay balanced and portion your trades appropriately, all you need to do is pick a few more winners than losers and the money should take care of itself.  

January 25th was the day we began our January Trade Review (Part 1 here) and we were thrilled with the drop at the time.  It's always a good exercise to go over the month with the benefit of hindsight – aside from seeing which premises played out and which did not – you also may find some trades that are real hidden gems – ones that we still like but are cheaper than our original entries.  Here we go:

Jan 27:  Monday Market Momentum – Reversing or Just Bouncing?

What a lovely correction!  

As noted in our Weekend Trade Reviews, we saw this dip coming from a mile away and, from the outset, we were never expecting more than 10% at most.  We're not even close to 10% so far but is it already time to fish the bottom or should we maintain a "Cashy and Cautious" stance?  


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PSW January Trade Review (Part IV)

OK, let's see if we can finish January off!

Actually, I hate to see it go as  our Trade Ideas in Parts, 1, 2 & 3 have had 51 winners and just 8 losers (87.6%) so far, not bad in a choppy market!  Now it's crunch time (or crash time) as we left off at the top, on Jan 10th and it's all downhill from here for the rest of the month.  

Keep in mind that timing is fairly arbitrary, of course, between the review and when the trade was made so our short trade idea on the Russell Futures at 1,160 from 1/10, made $6,000 per contract by 1/28 but is down $320 per contact as of Friday's close.  Whether we specifially called a stop to that trade or not – if you rode the contract from a $6,000 gain to a $320 loss, you are an idiot.  That's right – I'm not going to sugar-coat it – that is idiotic and you need to seek help!  cheeky

RUT WEEKLYHopefully, this is not your case and you have reasonable expectations and set reasonable stops on your trades.  My rule of thumb for Futures is, if we specifically call a stop (we usually do) then I count that total but if we make a general call, like we did on 1/10 in the main post, then I will put down the total gain on the trade with a reasonable stop (the /TF Futures went to 1,180 for an $8,000 gain before turning back up) based on our normal trading rules (see Strategy Section).  

We had been playing the top of the rally "Cashy and Cautious," with means we should be CONSERVATIVELY taking pofits off the table (and that's what we switched back to this week as well).  Unfortunately, as the old saying goes: "You can lead a trader to profits, but you can't make him take them off the table."

Jan 13:  Merger Monday – Suntory Buys Beam for 25% Premium ($16Bn)


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PSW January Trade Review (Part 3)

Finally we get to January!  

Of course, it's silly to review trades less than two weeks after we initiate them. which is why these reviews are perpetually behind.  In fact, we still have the last two days of December to get to but now we'll finally, actually get to January in Part 3.  We left off in Part 2 with 13 of our 14 (92%) trade ideas for the holiday weeks coming up winners and Part 1 had just two trades – also winners (ABX and SSO) – back from Dec 7th, when we were still bullish.  

Without any further ado (than the first two parts, of course), let's get into the first week of January and see how we did:

Dec 27:  Monday Market Musings – End of the Year Edition

I was still feeling like Chicken Little because my warnings to get to cash into the Holidays still seemed to be baseless but I pointed out how FAKE I thought the rally was and how FAKE all the media cheerleading about strong holiday sales was – using this fantastic example of Corporate Contralled Media Manipulation from Conan.  As I noted:

The news is nothing more than a script written by the powers that be as we prepare to celebrate New Year's Eve of 1984+30 and, of course, the so-called "Financial Media" is nothing more than a propaganda machine aimed at whipping viewers into a buying frenzy that retailers can only wish for.

From an index standpoint, we have easy warning lines to watch like Dow 16,000, S&P 1,800, Nasdaq 4,000, NYSE 10,000 and Russell 1,100 – all very much in the clear now and we'll put new, more aggressive levels on as they move up – so we'll always know when to pull the plug on our long plays.  

  • GOOG June $900 puts at $9, out at $11.50 - up 22%
  • Oil (/CL) short


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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743"

Thank you for you time!

 
 

Chart School

Inflating the Big Mac One Calorie at a Time

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

The June Consumer Price Index (CPI) is up 2.1% from a year ago. The latest monthly rise was driven by the escalation of oil prices. However, this rate of increase is slower than what consumers are experiencing. This post has been updated from our post on May 15, 2014.

Continuing our research into using the Big Mac as a gauge of inflation, we build on past posts but use our own research to draw conclusions. In previous articles, we have relied solely on The Economist’s calculation of the Big Mac price. The Economist has been conducting the research sporadically since 1986. However, it was not until a few years ago that they began regular updates to their research in both January and July. Believing this ...



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Zero Hedge

"The West's Public Enemy Number One"

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Newsweek's "triumphal" return to print with its expose on the wrong Satoshi Nakamoto (of "Bitcoin founder" fame) was less than, well, triumphal. So what is the eyeball starved media outlet seeking a second life to do? A screaming "grab me" epiphany of jingoist groupthink, in which we read that last week's events in Russia was "Putin's Lockerbie moment", should certainly help (and indeed it's very kind of Newsweek to have conducted all the forensic analysis and tests which confirm its magazine-selling allegations).

 

Which is ironic, considering ...



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Phil's Favorites

Ukraine Caught in Third Major Lie? Magic Number 312

Courtesy of Mish.

I have strong evidence from Ukrainian citizen Anatoly Shary that Kiev is caught in a third major lie regarding Buk deployment.

It takes a while to go over the evidence, condensed below, all having to do with the number 312 painted on a missile launcher.

Follow the Number

On March 8, Censor.Net, a Ukrainian Nationalist cite, says "Ukraine Defends Donetsk From Russian Incursion: 'Buk' Air Defense Rocket Systems Are Taking Up Positions. PHOTO + VIDEO"

The sub-headline reads: "A resident of Gorlovka, driving to work in Soledar, came across an entire convoy of military equipment. ...My coworkers and I counted 11 missile launchers ..."
...



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Insider Scoop

Relaxed Regulations Highlight Nuclear ETFs

Courtesy of Benzinga.

The Environmental Protection Agency is considering a review of its 1977 rule that limits the amount of whole-body radiation that any member of the public can be exposed to as a result of the uranium fuel cycle.

While they have not made any immediate determination to change the current level of 0.25 millisieverts per year of allowable radiation, they are reviewing the scientific data to decide if changes need to be made.

Items under review include water resource protection, spent fuel storage facilities and alternative technologie...



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Option Review

Sizable Call Spread Trades On Orexigen

A large call spread initiated on Orexigen Therapeutics, Inc. (Ticker: OREX) on Monday morning looks for shares in the name to rally approximately 30% by September expiration. The September expiration is noteworthy as the company awaits the results of the FDA’s review of its resubmitted New Drug Application (NDA) for NB32, an investigational medication being evaluated for weight loss, after the review was extended for three months back in June. The upcoming Prescription Drug User Fee Act (PDUFA) date is September 11, 2014, according to a press release issued by the company. Shares in Orexigen today are up roughly 0.40% at $5.34 as of 2:15 p.m. ET.

...

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Sabrient

Sector Detector: Bulls remain unfazed by borderline Black Swans

Courtesy of Sabrient Systems and Gradient Analytics

Despite a highly eventful week in the news, not much has changed from a stock market perspective. No doubt, investors have grown immune to the daily reports of geopolitical turmoil, including Ukraine vs. Russia for control of the eastern regions, Japan’s dispute with China over territorial waters, Sunni vs. Shiite for control of Iraq, Christians being driven out by Islamists, and other religious conflicts in places like Nigeria and Central African Republic. But last Thursday’s news of the Malaysian airliner tragically getting shot down over Ukraine, coupled with Israel’s ground incursion into Gaza, had the makings of a potential Black Swan event, which in my view is the only thing that could derail the relentless bull march higher in stocks.

Nevertheless, when it became clear that the airline...



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OpTrader

Swing trading portfolio - week of July 21st, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's the latest Stock World Weekly. Please use your PSW user name and password to log in. (You may take a free trial here.)

#452331232 / gettyimages.com ...

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Market Shadows

Danger: Falling Prices

Danger: Falling Prices

By Dr. Paul Price of Market Shadows

 

We tried holding up stock prices but couldn’t get the job done. Market Shadows’ Virtual Value Portfolio dipped by 2% during the week but still holds on to a market-beating 8.45% gain YTD. There was no escaping the downdraft after a major Portuguese bank failed. Of all the triggers for a large selloff, I’d guess the Portuguese bank failure was pretty far down most people's list of "things to worry about." 

All three major indices gave up some ground with the Nasdaq composite taking the hardest hi...



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Digital Currencies

Bitcoin Vs Gold - The Infographic

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

While Marc Faber has said "I will never sell my gold," he also noted "I like the idea of Bitcoin," and the battle between the 'alternative currencies' continues. The following infographic provides a succinct illustration of the similarities and differences between gold and bitcoin.

Please include attribution to www.jmbullion.com with this graphic.

...

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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...



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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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